How Do We Tie Turnover Cost Analysis To Engagement

Employee turnover has a number of unquantifiable costs besides recruiting and retraining replacements.

 How do we compare the cost of losing employees vs. finding their replacements? We understand that turnover costs more than retaining, but in what ways exactly does this manifest itself? We are in the process of trying to analyze this as we ramp up for an engagement survey.

—There They Go, Services, Houston

Dear There They Go:

Employee turnover has a number of unquantifiable costs besides recruiting and retraining replacements. Employee turnover is generally systematic of major problems within an organization, such as noncompetitive salary and benefits structure, poor or hostile working conditions, lack of a pro-employee culture or poor management. Any or all of these conditions can lead to hidden costs as a result of:

Poor employee morale
Poor employee morale will result in lost productivity. When employees see co-workers leave—and in many cases are forced to pick up the slack or take away from their own jobs to train replacements—the result often is lost productivity. Unless the turnover-generating issues are addressed, the remaining employees may not have the mindset to work as hard as they could.

Bad image for the company in the recruiting marketplace
Because of the availability of the Internet and social media, it is very easy for candidates to do research of companies at which they may consider working. If your company has a reputation of above-average turnover, many top candidates will shy away from applying. A high rate of turnover will also discourage internal employee referrals.

Potential lost revenue for the company
Depending on where turnover occurs in your company, customers could be affected. For example, if your company has high turnover in customer service or support, sales or manufacturing, these are positions that "touch" customers (or potential customers). New employees who are not able to perform as well as the employees who left could have a negative impact on customer satisfaction and retention. Also, the word of your turnover will spread quickly to your competitors—and they will use the information against you when competing for new business or contracts.

SOURCE: Mike Sweeny, MAS Recruiting, Cherry Hill, New Jersey

LEARN MORE: Please read steps to take when first compiling and interpreting engagement surveys.

Workforce Management Online, May 2011

Thanks to Crain Communications Inc.
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